Optional pricing in preferential issue allows VWAP-based floor pricing, mandates a multi-year lock-in and uniform method for related allotments.
New regulation permits issuers of frequently traded shares to opt for an alternate pricing method for preferential issues. The floor price must be the higher of: (a) the average of the weekly high and low of the VWAP over the twelve weeks preceding the relevant date; or (b) the average of the weekly high and low of the VWAP over the two weeks preceding the relevant date. Securities allotted under this method carry a three-year lock-in and all allotments under the same shareholder approval must use the same pricing method.

Escrow deposit requirement now mandates full consideration for certain indirect acquisitions, tightening open offer funding and securities rules.
Regulation 17 now requires that where an indirect acquisition prompts a public announcement under clause (e) of sub regulation (2) of regulation 13, the acquirer must deposit an amount equivalent to one hundred per cent of the open offer consideration into escrow and is prohibited from depositing securities for such acquisitions. Regulation 18 gains sub regulation (11A) obliging the acquirer to pay interest on delayed payments for accepted open offer shares at ten per cent per annum, subject to possible waiver by the Board if delay is not the acquirer's fault; regulation 22's language excluding bulk or block deals is removed.

Preferential issue exemption removes open offer obligation when the issue complies with regulation 164A, subject to pricing rules.
The amendment to regulation 10 inserts a new sub-regulation granting an exemption from the obligation to make an open offer under regulation 3(1) and regulation 4 for any acquisition of shares, voting rights or control effected by a preferential issue that complies with regulation 164A of the ICDR Regulations, 2018. The exemption also applies to target companies with infrequently traded shares that meet sub-regulations (2)-(8) of regulation 164A, with pricing for such shares governed by regulation 165 of the ICDR Regulations, 2018.

Pricing in preferential issue sets a VWAP based floor and adds eligibility, monitoring, lock in and certification obligations.
Regulation 164A mandates that preferential allotments for frequently traded shares in companies with stressed assets be priced at not less than the average weekly high low VWAP over the two weeks preceding the relevant date. Allotment is allowed only if the issuer meets any two of three stress indicators (continuing payment default of specified debts, an inter creditor agreement under the RBI framework, or a downgrade to default). The rule requires non promoter allottees subject to exclusion categories, shareholder voting thresholds, prohibition on using proceeds to repay promoter loans, external monitoring of proceeds with quarterly reporting, audit committee oversight, a lock in on allotted shares, and certification by the statutory auditor and audit committee at notice and allotment.

Regulatory timeline shortened: ICDR amendment reduces prescribed compliance period to two weeks under revised regulation 172(3).
The Amendment Regulations substitute the previously prescribed period of six months in regulation 172(3) of the ICDR Regulations, 2018 with a period of two weeks, thereby shortening the compliance timeframe. The amendment is titled as the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2020 and comes into force upon publication in the Official Gazette.

Sponsor de-classification permitted subject to unit-holder approval, concentration limits and exit option for dissenting unitholders.
The Regulations permit de-classification of sponsor status for REITs listed three years, subject to conditions: sponsor and associate holdings together not exceeding ten percent, the REIT manager not controlled by the sponsor or associates, sponsors not being fugitive economic offenders, and obtaining unit-holder approval as required under Regulation 22(5). They add the term "inducted sponsor," expand eligible sponsors to include insurance companies and mutual funds, cap non-sponsor investor subscription at twenty-five percent, and require seventy-five percent unit-holder approval for acquisitions exceeding twenty-five percent, with an exit option for dissenters if approval is not obtained.

Sponsor de-classification allowed subject to holding limits, independent investment manager and broad unit-holder approval and exit option.
The Regulations add an inducted sponsor definition and broaden sponsor-related definitions to include certain institutional investors. They permit de-classification of a sponsor after listed status for a statutory period, subject to conditions including a cap on sponsor-and-associate unit holding, independence of the investment manager from the sponsor, and unit-holder approval. The amendments cap maximum subscription by any non-sponsor investor in initial offers, restrict acquisitions that would exceed a prescribed share of outstanding units without super-majority approval, and require exit options where such approval is not obtained; sponsor changes or control transfers also require super-majority approval or mandated exit remedies.

Promoter voting rights acquisition temporarily permitted via preferential issue, enabling increased stake without triggering open offer requirements until specified deadline.
The amendment authorises a promoter to acquire voting rights beyond the five percent threshold up to a temporary higher limit when the acquisition results from a preferential issue of equity shares by the target company for the financial year 2020-21, and clarifies that the relaxation in regulation 6's first proviso is available only until March 31, 2021.

Renewal of recognition granted to NSE IFSC Limited, conditional on compliance with regulator-specified conditions for a one-year term.
Renewal of recognition is granted to NSE IFSC Limited under the regulatory framework governing stock exchanges, exercised pursuant to statutory powers to renew recognition for a fixed one-year tenure, and is expressly subject to compliance with conditions specified by the regulator from time to time and to any additional conditions that may be prescribed or imposed subsequently.

Renewal of recognition for a clearing corporation granted subject to compliance with regulatory conditions and supervisory requirements.
SEBI renews recognition of NSE IFSC Clearing Corporation Limited (NICCL) for a one-year period from 29 May 2020 to 28 May 2021 under statutory powers, subject to conditions specified by SEBI and to any further conditions that may be prescribed or imposed, thereby continuing NICCL's status as a recognized clearing corporation contingent on compliance with regulatory requirements.

Fee relief for regulated entities reduces SEBI filing and turnover fees during a temporary specified regulatory period.
Stock broker turnover fees across cash, equity derivatives, currency derivatives, interest rate derivatives and most commodity derivatives shall be payable at 50% of the ordinarily applicable percentage for the concession period, inclusive of off-market transactions. Issue filing fees and buy-back filing fees are temporarily restructured by slab with reduced flat charges, lower percentage rates, and correspondingly reduced late-filing fees for filings within one year after expiry of the observation letter.

Regulatory sandbox: Board may grant temporary exemptions to securities rules for live testing of innovative products under conditions.
The amendment inserts chapters across multiple SEBI regulations authorising the Board to grant time limited exemptions (not exceeding twelve months) from specified regulatory provisions to permit live testing of new products, processes, services and business models in a defined regulatory sandbox, subject to conditions and continuous compliance requirements as specified by the Board; "regulatory sandbox" is defined as a live testing environment deploying innovations to a limited set of eligible customers under Board specified conditions.

Continuation of essential market services permits securities regulator and capital and debt market operations to continue nationwide.
The revised containment guidelines confirm that the earlier notification authorising continuation of capital and debt market services and securities market functions remains in force in all parts of the country until the stated expiry, permitting the securities regulator and specified market participants and intermediaries to continue operations during the containment period.

Foreign Portfolio Investor eligibility expanded to include entities from countries specified by government order or by international treaty.
The amendment inserts into regulation 5(a)(iv) a provision permitting FPIs to be accepted not only from member countries but also from any country specified by the Central Government by an order or by way of an agreement or treaty with other sovereign governments, thereby providing an alternative route for jurisdictional recognition for FPI eligibility.

Exemption of capital and debt market services from closure, allowing specified market entities to continue operations under minimum staffing.
Exemption of capital and debt market services from mandatory COVID-19 closure measures, authorizing a list of specified market participants to continue operations. The regulator's head, regional and local offices are required to function with minimum staff to support these market services, and the notification directs strict implementation for a defined limited period commencing the day after issuance.

Designation of Special Courts empowers designated district courts to exercise jurisdiction under securities and depository laws.
Central Government designation of specified district courts as Special Courts to exercise jurisdiction under the Securities and Exchange Board of India Act, the Securities Contracts (Regulation) Act and the Depositories Act, made after concurrence of the respective High Court Chief Justices; identifies the District and Sessions Judge, Shillong for Meghalaya and the Additional District and Session Judge, Port Blair for Andaman and Nicobar Islands.

Superior voting rights shares: mandatory co-listing with ordinary shares and exemption from minimum public offer requirements.
An amendment mandates that companies issuing equity shares with superior voting rights to promoters or founders must list those shares on the same recognized stock exchange when listing ordinary shares offered to the public, and exempts such promoter-held superior voting rights shares from the minimum offer and allotment requirements under clause (b) of sub-rule (2) of rule 19 where the company seeks listing of ordinary shares for a public offering under rule 19 and SEBI regulations.

Broadening of authorised officials: substituting 'officer not below Division Chief' with 'person' expands who may act.
The Securities and Exchange Board of India promulgates the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) (Amendment) Regulations, 2020, effective on publication in the Official Gazette, substituting the words "officer of the Board not below the rank of Division Chief" (and "officer not below the rank of Division Chief") with the word "person" in regulation 2(1)(d) and regulation 5 of the 2003 Regulations.

Sponsor investment requirement: mandatory non-redeemable contribution to new fund offers, with Board-specified scheme option.
For gold exchange traded fund schemes, assets of the scheme being gold or gold-related instruments may be kept in the custody of a custodian registered with the Board. The sponsor or asset management company must make a mandatory investment in the new fund offer at a minimum prescribed level, and such investment shall not be redeemed unless the scheme is wound up; the Board may specify the option of the scheme in which that investment is made.

Fast track rights issue exemption: REITs exempted from filing draft offer documents subject to Board-specified conditions.
An amendment adds a proviso to regulation 14(11) dispensing with the requirement for REITs to file a draft offer document with the Board for a fast track rights issue, subject to fulfillment of conditions specified by the Board, thereby creating a conditional exemption from the filing obligation for fast-track rights issuances.